IT budgets grow for AI, security and cloud but legacy spending sticks around

Dive Brief:

More than half of IT organizations expect to increase budgets in 2020, adding 3.2% to spending on average, according to a survey from The Enterprise Strategy Group of more than 650 senior IT decision makers. The respondents, from a mix of midmarket and enterprise organizations, played a role in creating 2020 IT budget and spending plans.
Spending intentions vary by sector, but healthcare and technology led industries with the most respondents expecting a budget increase in 2020, according to ESG. Education and government trail other sectors; only 43% and 42%, respectively, expect spending to increase this year.
This year, companies expect artificial intelligence and machine learning, cybersecurity and cloud to lead spending increases, according to the report. Spending on servers and endpoint devices is dropping off as 35% and 37%, respectively, of respondents anticipate an increase in spending. Budgets in those categories will remain relatively flat.

Dive Insight:

The trends hold: spending on advanced, more nimble technologies is on the rise as organizations work to phase out traditional technology stacks.

It's important to highlight IT decision makers only project a significant decrease in spending in few areas, including servers, endpoint devices and converged or hyperconverged infrastructure platforms.

As budgets steadily increase year-over-year, organizations are maintaining investments in core infrastructure areas, where spending stays relatively stagnant — think databases, storage and network infrastructure.

The additional investments are added to security and more digital technologies, meant to change the way business technology stacks operate. As companies maintain on-prem spending, they are allocating more resources to service-based technologies, according to ESG's research.

Access to data is driving the shift. Companies are collecting and analyzing more data, adding additional needs for storage and analysis. The data layer is adding complexity and 37% of ESG respondents say data volumes are driving higher IT spending.

Under it all, the IT stack is growing more complex — two-thirds of respondents say it's more complex than it was two years ago. Layer on decentralized spending, where more departments are increasing technology investments outside of the CIO purview, and businesses are faced with a nest of applications.

The caution is if organizations are increasing investment without a clear understanding of how additional technology will fit into a portfolio. For example, maintaining investments in traditional storage technologies while increasing cloud spending could create portfolio redundancy and wasted investments. Shifting to the cloud can create traps along the way.